British Airways yesterday reported its worst result since privatisation 15 years ago and its first pre-tax loss since 1982, as it fell from a pre-tax profit of £150 million sterling (€238 million) to a pre-tax loss of £200 million last year.

The loss was cushioned by £145 million of gains from disposals including the sale of Go, its former low-cost subsidiary, and a £49 million credit for the revaluation of the group's yen debt. The airline took an £80 million restructuring charge for job cuts.

The loss was lower than investors had feared, as cost-cutting measures including the axing of 7,000 jobs had a stronger-than-expected impact in the final quarter. The shares closed 2p higher at 237½p.

BA was cautious about the outlook for recovery in demand for air travel, saying it expected the "market to remain soft" in the face of continuing "global economic and political uncertainty".

The group said it had been hit last year by a combination of the economic slowdown, particularly in the US, and the sharp fall in business travel, the downturn in air traffic after the September 11th terrorist attacks in the US, and the foot-and-mouth outbreak in Britain, which had undermined inbound tourism.

It confirmed it would not pay a dividend for the past year. Lord Marshall, chairman, warned that BA had to strengthen its balance sheet and reserves and needed to see "a return to profitability" before the payout could be reinstated.

BA suffered an operating loss of £110 million in the year to March compared with a profit of £380 million a year earlier, as turnover slipped 10.1 per cent to £8.3 billion.

Mr Rod Eddington, chief executive, said that the bulk of BA's operating losses had been accumulated on its short-haul operations in Europe, where the deficit widened from £172 million to £244 million.

The latest setback pushed BA's total operating losses in Europe to £1.06 billion in the past six years. The airline is focusing its restructuring on the short-haul network and the fight to compete with the low-cost carriers, and Mr Eddington pledged that the group would break even in Europe by March 2004.

Operating profits on BA's Americas operations fell from £470 million to £144 million.

He ruled out a rights issue to strengthen the strained balance sheet and said the group had no intention of selling its 21.4 per cent stake in Qantas, the Australian airline.